Telefonica Halts Seven-Quarter Sales Slump on Price Hike

(Bloomberg) -- Telefonica SA sales stabilized in the second quarter as the phone carrier benefited from price hikes for premium products in Spain, supporting its annual outlook for growth and putting an end to almost two years of declining revenues.

• Revenue was flat at 12.1 billion euros ($13.5 billion), the company said in a statement on Thursday. That compares with the 12 billion-euro average of six analyst estimates compiled by Bloomberg.

Key Insights

• The stabilizing sales may give investors confidence in the former monopoly’s target of increasing organic revenue by 2% in 2019. The carrier is relying heavily on growth in Spain to reach that goal after a tough first quarter largely because of competition. The company reiterated its sales target on Thursday.
• Revenue is expected by analysts to improve in the second half, underpinning an expected gain in operating income before depreciation and amortization, known as Oibda.
• The stable revenue puts an end to seven quarters of declining sales, with the previous increase having been in the second quarter of 2017. The changing trend was mainly supported by higher revenues in the U.K. and Germany, as well as Spain.

Market Reaction

• Telefonica rose 0.5% to 7.32 euros per share at the start of trading in Madrid. The shares shares are down less than 1% this year, outperforming the broader Stoxx 600 Telecom index’s 2.8% decline.

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• Click here for the earnings report
• Oibda rose to 4.438 billion euros, in line with the 4.4 billion-euro average analyst estimate compiled by Bloomberg.

To contact the reporter on this story: Rodrigo Orihuela in Madrid at rorihuela@bloomberg.net

To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Dave McCombs

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